Industry | 2010.08.29
Culture secretary Jeremy Hunt tells BBC to prepare for deeper cuts
Minister says BBC \'has to live on the same planet\' as official austerity drive and won\'t rule out licence fee reduction
The culture secretary, Jeremy Hunt, has warned the BBC that it faces making deeper cuts and refused to rule out a reduction the licence fee.
Hunt, speaking in an interview at the MediaGuardian Edinburgh International Television Festival, likened the BBC\'s situation to that facing government departments, which he said are being forced to make cuts upward of 25%. "The BBC has to live on the same planet as everyone else," he said.
He was then asked if he considered the BBC to be a government department. "I wouldn\'t describe it as a government department. It is an arm\'s length body, a public body," he replied.
Hunt reiterated his desire to see the corporation subjected to greater scrutiny, from financial transparency to putting "red lines" around its activities to protect commercial competitors, and indicated that next year\'s negotiations for the next licence fee settlement would be tough.
"We haven\'t started any discussions on the licence fee yet. That is something that will start next year," he said.
He added that on this basis he could not categorically rule out the licence fee being cut.
Hunt said there were three key areas where he would ask the BBC to respond to when the negotiations began.
The first was a "better system for delivering value for money". "We want to establish in the licence fee discussions what mechanisms the BBC will put in place – it is not just about efficiencies. I\'ll be asking the BBC what will be put in place on a permanent basis for transparency," he said.
He also said he wanted the BBC to show a "much clearer understanding of its competitors" and "put red lines around its activities". "We need, the BBC needs, competitors in the marketplace to deliver high-quality content and television," Hunt added. "We need to know competitors will not suddenly be put out of business by a wall of licence fee money."
The third area was the BBC\'s involvement in helping the government deliver on its plans to roll out broadband.
Hunt was asked if he thought the BBC had mishandled the issue of executive pay.
"I do. It is not our job to set salaries of management at the BBC or which staff it employs. There are times of real public concern and executive pay is one of those areas," he said. "The BBC is addressing it but took a long time so the BBC has perhaps had a rougher time than it might otherwise have had."
He added that the BBC\'s handling of it was probably a contributing factor to the level of anger and backlash from staff over proposed cuts to pensions.
"It is perhaps one reason why there is a lot of anger over the pensions dispute," he said. "It is an example of how a better governance structure than we have now could have avoided some of these problems."
Hunt was supportive, to an extent, of director general Mark Thompson\'s defence of the BBC in his MacTaggart lecture last night.
"It felt a little bit like a family feud between two giants who dominate the media landscape," he said. "We need to step back. Both are incredibly important. BSkyB revolutionised the way we watch TV. The BBC is responsible for the fact we have probably the highest quality content in the world.
"I do buy large parts of what he [Thompson] said. I also disagree – I don\'t look at his challenge to Sky to invest in content in the stark terms that he does."
He also said that as the UK consumers become ever more digital, with viewers increasingly accessing content beyond the TV screen, the government was looking at alternative ways to collect the licence fee.
"The principle of effectively a household tax to run a public service broadcaster is accepted," he said. "But we will have to think of new ways of collecting it."
Hunt also said that there was a distinct possibility that the government would have to look at the entire TV advertising trading system.
He acknowledged that the contracts rights renewal system, the mechanism which governs ITV\'s airtime sales deals with advertisers, had to be removed.
"It is important we have a strong BBC and that the BBC has strong competition," he said. "I think it is possible that we may need to have that review [of the entire TV advertising market. It is no secret that I don\'t think CRR is appropriate… we are looking at it at the moment. In the end we have to get out of the business of regulating the way airtime is sold."
He was asked to elaborate on how he would look to remove the CRR mechanism, when the Competition Commission has said it should stay in place to protect ITV\'s rivals.
"The Competition Commission has a very, very carefully defined remit," he said. "I want to look at the remit we give it on this type of issue [and whether] it is broad enough. That is what we are looking at at the moment."
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